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A Study on the Effects of the Policy Funding Program Provided to the Small and Medium Sized Enterprises in Gangwon-Do  

Shim, Sangpil (Graduate School of Government, Business and Entrepreneurship, Yonsei University)
Jang, Woon Wook (College of Government and Business, Yonsei University)
Publication Information
Asia-Pacific Journal of Business Venturing and Entrepreneurship / v.14, no.4, 2019 , pp. 179-190 More about this Journal
Abstract
To alleviate financing difficulties of small and medium sized enterprises (SMEs), the government and municipal governments are providing a variety of SME policy funding programs. This study introduced the policy funding program of Gangwon-do and quantitatively analyzed the financial performance of companies supported by the Gangwon-do SME policy fund in the year 2014. Specifically, we compared the financial ratios for three years, from 2013 to 2015, between funded firms and non-funded firms. In addition, we applied a regression analysis to see if the policy funding program contributed to profitability (the operating profit growth and return on equity), stability (the interest coverage ratio and debt-to-equity ratio), and growth (the asset growth and sales growth) of the funded firms. The empirical results show that the firms that received the policy funds did not show any improvement compared to non-funded firms in terms of profitability, stability, and growth. This suggests that Gangwon-do should improve the policy funding program, that currently provides only an interest amount of 2-4% of the corporate loan principal, without any strategic selection criteria for the target funded firms, and without any follow-up management system, after support.
Keywords
SME; Policy funding; Financial performance; Gangwon-do;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
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